An anonymous reader writes: In a wide-ranging interview, C|Net talks in depth with Jonathan Schwartz, CEO of Sun Microsystems, about the company's open source strategy. Schwartz indicates that despite (or, rather, because of) open sourcing all of its software, software revenues actually increased in 2006 by 13%. In his words, in order to have sales, Sun (and other vendors) must first have adoption. Open source is an efficient, effective way to drive adoption, and therefore is Sun's strategic differentiator against Microsoft, IBM, and other global competitors. Schwartz also shares his top advice for executives at both open source and proprietary companies, where he learned the power of developers in driving sales, and whether he views Red Hat as a competitor.

If you could start over again from scratch, what would you do differently?

I would have done it [given away software] in 1996, the day I arrived. It would have been much easier then.

Easier, maybe, but would the market have understood?

The market may not have understood, but it's not "the market" (immediate paying customers) we would have been after. It would have been the students and other "free" users that would have become the paying users of the future.

If you were to go ask the CIO of any of the large companies around here in San Francisco (The Gap, Wells Fargo, Charles Schwab, etc.) whether they worry more about their Internet-facing IT or their intranet-facing IT, they will tell you that they are much more focused on external-facing IT. The consumer Internet, as it were. And so they are increasingly concerned with areas with large consumer populations like China, India, etc. This is tomorrow's market opportunity. These customers may not pay today, but these "tomorrow markets" are won by free adoption today.

IBM knew this a LONG time ago. IIRC they basically gave away their Selectrics (electric typewriters) to schools to use in their typing classes. When these students entered the business world, they were instrumental in getting companies to dispose of the old, manual typewriters and to replace them with electrics - and the one they knew best was the Selectric. IBM went on to take over the typewriter market.